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IN THIS ISSUE – “We’re Just Going to Give It Our Best Shot”
Newsom’s Grim Budget Forecast…It’s a Poker Bluff! No, It’s Extremely Optimistic!
- Senate Budget Leader Tells Governor to Consult Legislature
- Major Companies Donate $26 Million to Governor’s COVID Actions:
“Generosity & Compassion” Or “People Who Want Something”?
- CA Chamber “Job-Killer” List Aims to Quash Legislation…and Usually Does
- Congressional Seat Flip Seen as Republican Turning Point
- Pandemic Pain Hits Silicon Valley Tech Titans
- Musk Rejects California; State Panel Rejects Musk
- Fewer Babies, Fewer Immigrants; Golden State Population Stable
FOR THE WEEK ENDING MAY 22, 2020
Capital News & Notes (CN&N) harvests California legislative and regulatory insights from dozens of media and official sources for the past week, tailored to your business and advocacy interests. Please feel free to forward.
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Newsom’s Grim Budget Forecast – It’s A Poker Bluff! No, It’s Extremely Optimistic!
CalMatters
Gov. Gavin Newsom proposed a revised budget for the coming fiscal year that projects a massive gap between the money coming in and the money going out: $54 billion.
The finance wonks within the Newsom administration came to that 12-digit total in part based on an equally dire view of the state’s economic future. According to the state’s Department of Finance, unemployment in California will peak at nearly 25% before June. It will then remain above 20% for the rest of the year and above the highest unemployment rate of the Great Recession until the spring of 2023, they say.
Those are grim numbers. Much grimmer, in fact, than those projected by other notable economic forecasters in California.
Budgetary experts outside the administration offered a mix of explanations. Some said Newsom’s economic forecast simply reflects the uncertainty inherent in trying to predict the future during an unprecedented global crisis.
Others characterized the governor’s projections as “difficult to comprehend,” “preposterous” or an overly pessimistic “poker bluff” intended to extract more support from the federal government.
Irena Asmundson, chief economist at the state Department of Finance, noted that her projection assumes a bounce-back that will take about as long as the one that followed the end of the Great Recession.
“We think that we’re going to recover to the pre-recession peak in about six years…even though our drop is much bigger,” she said. “So from that perspective, we’re actually being extremely optimistic.”
The Legislative Analyst’s Office, the nonpartisan agency that analyzes the budget for state legislators, released two projections of its own: a rosy “U-shaped” economic bounce-back and a slower, more painful “L-shaped” return to normal. That more dire projection has the state unemployment rate maxing out at 11.5% in 2020 — far better than the Newsom’s assumed annual average of 18%.
The governor’s bleaker forecast puts a tighter chokehold on the state budget, said Gabriel Petek, the state’s legislative analyst. For example, the administration is forecasting significantly higher spending on CalWORKS, the state cash welfare program, doubling the yearly number of projected enrollees compared to its January forecast. Petek called such a dramatic increase “a little perplexing.” That projected spike in spending means less fiscal wiggle room for state legislators and a higher projected deficit.
But overall, Petek said Newsom’s grimmer economic forecast is “reasonable.” The administration’s estimate for the state’s total haul of tax revenue next year is pretty close to LAO’s guess. Given the profound uncertainty of the moment, a wide array of predictions should come as no surprise.
“We don’t think we know, by any stretch of the imagination, what’s going to happen,” added Ann Hollingshead, senior fiscal and policy analyst with the LAO. “Unfortunately the state does need to pass a budget by June 15, and so we’re just going to give it our best shot.”
Economic forecasts are always built on a series of assumptions. In putting together UCLA’s Anderson Forecast of the state economy director Jerry Nickelsburg said he presumed that the worst of the pandemic is over. The forecast, due to be published soon, will show the state unemployment rate topping out at roughly 18% before “we start growing out of the depths” in the second half of the year, he said.
But during a recession driven by a novel viral outbreak, the assumptions built into the current batch of forecasts don’t even fit within the average economists’ wheelhouse, said Mark Schniepp, director of the California Economic Forecast, a Santa Barbara consulting firm with public and private sector clients
The downturn “wasn’t caused by any particular imbalance in the economy — this was done by a deliberate shutdown,” he said. “The rules for getting things back up and running are going to be all over the place, and after that nobody knows how things are going to go. Not even the epidemiologists know and they’re the experts, we’re not the experts.”
Even so, Schniepp said he is skeptical of Newsom’s economic forecast of sluggish growth for years to come.
“It appears that they are assuming the economy will be essentially shut down until a vaccine is developed, or a cure,” he said. And he called that unrealistic.
Not so, said Asmundson. Instead, she said, it just takes time for the unemployed to find new jobs and for businesses to decide that enough customers are showing up to start hiring again. The residual fear of the virus could slow that process. “Given that this is a new disease (and) there are so many unknowns left — how it transmits, whether people remain immune, whether or not we will have a vaccine, who is affected, what are even the symptoms,” she said, “I look at that and I think, are people actually going to feel comfortable bouncing right back in two to three years? And I just don’t know.”
Chris Thornberg, founding partner of the consulting firm Beacon Economics, had a blunter way of characterizing the governor’s forecast: “It’s just preposterously negative…How can you say that out loud without giggling?”
Though the most obvious comparison to the current pandemic-induced recession is the last “once in a generation” economic crises, the Great Recession, Thornberg said that’s not the right reference point. “The worst recessions are the ones that come after the collapse of some massive financial bubble,” he said. Recoveries can drag on for years as borrowers try to pay down their debts simultaneously, banks are slow to begin lending again, and certain sectors of the economy scale down to more sustainable long-term levels.
Thornberg said he does not foresee such long-term structural damage to the economy this time.
“The vast majority of the companies that are now closed were perfectly fine and sustainable, and I expect the vast majority to open back up again,” he said.
Of course, just because Newsom’s economic forecast is the gloomiest doesn’t necessarily mean it’s inaccurate. Fears of contagion could keep shoppers out of stores for years to come. Lock-down orders could become a regular feature of California life.
“I would love to be wrong about my forecast,” said Asmundson at the Department of Finance.
But state Sen. John Moorlach, a Republican from Costa Mesa and one of the state’s more vocal conservative critics on budget issues, said he believes the governor may be painting an hyperbolically dark picture of the future in order to extract more aid from the federal government.
“Gavin has to do some awkward things to try to get federal help, but I find these tacky bluffs a little disturbing,” he said. “I think it’s brave but I think it’s tacky.”
In announcing his revised budget last week, the governor said that roughly $14 billion in cuts could be avoided if the federal government grants more money to the state.
Last week in Washington DC, the Democratic-controlled House passed another $3 trillion relief bill with roughly one third of the money designated for cash strapped cities and states. Jerome Powell, the Federal Reserve chairman appointed by President Trump, has also joined the call for more Congressional support, calling it “costly but worth it if it helps avoid long-term economic damage” on Sunday. But Republicans in the GOP-controlled Senate are splitover whether they will take up the proposal.
Newsom has been stepping up the political pressure. On CNN’s “State of the Union” on Sunday, the governor said that for states like California that “are facing unprecedented budgetary stress, it is incumbent on the federal government to help.”
Today, the 91-member taskforce that the governor assembled to help steer the state’s recovery sent a letter to bipartisan Congressional leaders.
“Without additional assistance from the federal government, the very programs that will help people get back to their lives and get back to work – from childcare to job training to small business support – will all be forced up on the chopping block,” the letter reads.
Senate Budget Leader Tells Governor to Consult Legislature
Sacramento Bee
A top-ranking Democratic lawmaker is pushing back against part of Gov. Gavin Newsom’s revised budget proposal, arguing it would curtail the Legislature’s power over COVID-19 spending decisions.
Sen. Holly Mitchell, D-Los Angeles, raised concerns during a Monday budget hearing about nearly $3 billion that Newsom is proposing to spend on COVID-19 response, including on protective equipment like masks, critical medical supplies and hospital surge preparations.
Lawmakers should be involved in the decisions to spend that money, but the governor’s proposal doesn’t give them enough of a say, said Mitchell, who chairs the Senate Budget Committee.
Vivek Viswanathan of the governor’s Department of Finance told Mitchell that the proposal is written to allow the administration “flexibility” to respond quickly in the event of a surge or second wave of COVID-19 cases, or another emergency.
“We do think that it is important,” he said. “This is a once in a century emergency, and nobody knows how it’s going to go.”
Mitchell responded that the Legislature is also capable of responding quickly and should be included in those spending decisions.
“We fully appreciate the need for the administration to be nimble and be empowered to respond in a timely manner,” she said. “But I think it’s very important that the administration find a way to balance your ability to respond timely with acknowledging the role the Legislature must play.”
In mid-March, lawmakers quickly approved $1.1 billion in emergency funds and gave the Democratic governor wide latitude to spend them on coronavirus response. After passing the bill, lawmakers called a recess and left Sacramento as part of statewide efforts to slow the virus’ spread by shutting down workplaces.
Lawmakers have since raised concerns that the governor has not kept them informed about spending decisions, including a $1 billion mask deal with Chinese company BYD. The Newsom administration initially refused Mitchell’s requests to view the BYD contract, eventually releasing it publicly after the masks began to arrive in California.
The updated budget proposal Newsom unveiled last week would expand that COVID-19 emergency fund by $2.9 billion dollars.
In its analysis, the nonpartisan Legislative Analyst’s Office writes that Newsom’s proposal prompts “serious concerns about the Legislature’s role in future decisions.”
“In many cases, we are very troubled by the degree of authority that the administration is requesting that the Legislature delegate,” the analyst’s office wrote.
The administration anticipates that most of that spending would be reimbursed by the federal government.
https://www.sacbee.com/news/politics-government/capitol-alert/article242828811.html?#storylink=cpy
Legislative Analyst report:
https://lao.ca.gov/Publications/Report/4232?utm_source=laowww&utm_medium=email&utm_campaign=4232\
Politico
Prominent social media, broadcasting and other major interests have poured nearly $26 million into Covid-19 efforts at Gov. Gavin Newsom’s request, a record amount that came as some of the companies lobbied the governor’s office on data privacy and other thorny regulatory matters, state disclosures show.
The amount of donated ad space to the state’s public health messaging effort has tripled since Newsom first touted it in late March, applauding the California-based companies who stepped up to “join the fight against COVID-19.”
Companies like Google, Facebook, iHeartMedia, Fox and Clear Channel have run ads in California and around the nation urging people to protect themselves and others by staying home. First Partner Jennifer Siebel Newsom stars in some of the California spots, while others feature public health officials, celebrity comedians like Will Farrell and Ken Jeong and a cartoon narrated by Newsom.
Google and iHeart Media each ran $7 million worth of ads as part of California’s awareness campaign, Newsom reported, as required by state transparency laws.
The governor also reported that the consulting firm McKinsey & Company in early April contributed $250,000 in services as it worked with his business development office to “address the economic impact of COVID-19 in California.” McKinsey has pursued various state consulting opportunities in the past, and Newsom last year awarded the company at least four consulting contracts worth more than $2 million, according to The Sacramento Bee.
Another state contractor, Sacramento communications firm Runyon Saltzman, contributed $150,000 in Covid-19 ad services.
Informing citizens about how to protect themselves and others during the pandemic has clear societal benefits, government and ethics experts say. But, they add, the public should view any such private-sector assistance with a critical eye.
“We’ve never seen such large amounts of money before — it’s way beyond what we’ve seen,” said Bob Stern, the principal co-author of the 1974 Political Reform Act that underpins California campaign finance rules. “Even though it’s for good purposes, it could be coming from people who want something from you.”
Businesses or individuals lending a hand to government may enhance their ability to influence policymakers by generating goodwill, said Jonathan Mehta Stein, executive director of California Common Cause, a good-government nonprofit based in Los Angeles.
“An advertising campaign to educate people about Covid-19 is beneficial to all,” Stein said. “The key question is: Is it also beneficial to Governor Newsom? The answer is probably yes. It’s also beneficial to the tech companies. They can say they are corporate philanthropists as opposed to campaign donors. And they earn the good graces of the most powerful person in California.”
And, unlike campaign contributions, the experts note, these so called “behested payments” — coordinated or requested by elected officials for certain charitable or governmental causes — have no limit. The $26 million is easily a record amount raised by a California governor in a year.
Nathan Click, a spokesperson for Newsom, said the PSA campaign has saved lives and that “being able to effectively communicate life-saving messages in real time about how to stop the spread of COVID-19 has been essential to our state’s success.”
“This has been an ‘all hands on deck’ crisis, calling on people in organizations of all shapes and sizes to pitch in,” Click said.
More than two dozen companies have helped Newsom and public health officials exhort Californians to stay home during the crisis, including Fox ($2 million), TikTok ($300,000), Snapchat ($130,000), Twitter ($10,000) and Pandora ($77,000), the state disclosures show.
Other Covid-19 contributions address homelessness and e-learning, such as $500,000 from video conferencing company Zoom. The platform has become ubiquitous in the current telework and remote learning era, but the company also has faced increasing scrutiny from state and federal leaders over privacy concerns.
Some of the same businesses have embraced similar collaborations at the national and international levels. A March news release from iHeartMedia announced the Ad Council trade group and major media networks were launching a PSA campaign in coordination with the White House, CDC and the Department of Health and Human Services.
“The business community’s generosity, compassion, and commitment to do good is both inspiring and essential in this critical time of need,” said Lisa Sherman, the Ad Council’s president and CEO, in the release.
A Facebook spokesperson noted that the ad credits the company gave to California’s Covid-19 public awareness campaign were part of broader efforts to assist health authorities and governments around the world. And Google CEO Sundar Pichai in late March announced a series of Covid-19 response commitments that included $250 million in ad grants to help the World Health Organization and 100 other government agencies “provide critical information on how to prevent the spread of COVID-19 and other measures to help local communities.”
In California, the PSA support comes as social media companies, advertisers and other business interests engage in a prolonged battle with consumer privacy advocates over how the state should regulate the flow of consumers’ personal information. The landmark California Consumer Privacy Act, the strongest data privacy law in the nation, took effect in January. It is slated to be enforced by Attorney General Xavier Becerra beginning July 1, though the final regulations are still pending and business groups have been seeking a delay, citing the pandemic.
Facebook donated $1 million to California’s PSA campaign in early April after spending more than $268,000 in the first three months of the year to lobby the state on privacy policy, housing proposals and issues related to the pandemic, according to disclosures.
The Chan Zuckerberg Initiative established by Facebook founder Mark Zuckerberg and his wife Priscilla Chan contributed another $195,000 this month to a polling project “to support the state’s response to Covid-19.”
Google, before investing in California’s public health awareness campaign, spent roughly $73,000 in the first three months of the year on lobbying expenses in California, focusing on bills related to privacy and biometric surveillance as well as CCPA regulations, according to lobbying disclosures.
Google’s Verily Life Sciences has secured contracts with the state to provide Covid-19 screening and testing services in California.
Clear Channel, which ran billboards and other ads with nearly $1.2 million worth of PSA messaging, lobbied the state on outdoor advertising issues at the beginning of the year. There are no proposals pending in the state legislature on outdoor advertising, said company spokesperson Jason King, who added that “giving back is part of our DNA.”
“Our business and our media are part of the local communities where we operate, and since our inception, we’ve continuously used our network to elevate messages around public safety, including times of national emergencies, disasters and crises,” King said in a statement.
When a company gives money or services to the state, it doesn’t necessarily imply a quid pro quo, said Stern.
But, he said, if someone has contributed a bundle of money to your cause “and that person has something pending before you, there is a feeling of gratitude.”
CA Chamber “Job-Killer” List Aims to Quash Legislation…and Usually Does
CalMatters
A quarter-century ago — rather suddenly — California began shifting rapidly from a two-party state into what became utter dominance by one party, the Democrats.
The reasons for that transformation are still being debated, but it is a political fact of life in the nation’s most populous state, nowhere more evident than in the state Capitol, an arena for duels between competing economic interests.
Business groups found themselves playing defense against a quartet of foes closely aligned with the dominant Democrats — labor unions, environmental advocates, consumer activists and personal injury lawyers — especially after a business-friendly Republican governor, Pete Wilson, was succeeded by Democrat Gray Davis in 1999.
A pattern developed. Annually, the four groups would introduce their legislative agendas and the California Chamber of Commerce, the state’s leading business lobby, would choose a few dozen of those it considered to be most costly or bothersome and label them “job killers.”
Coupled with the cultivation of moderate, pro-business legislators, it’s been a remarkably successful strategy for the chamber and its allies. Year after year, only a few bills placed on the list have made it into law. Most are ground up, without formal votes, in the legislative machinery, some are amended to shed the label and governors of both parties tend to veto the few that reach them.
Since 1997, when the program began, the “job killer” label has been applied to 761 bills and just 62 became law, a 92% kill ratio.
The 2020 legislative session is unlike any other due to the COVID-19 pandemic. The Legislature recessed for nearly two months as part of a statewide lockdown to deal with the crisis and as it reconvened this month, legislative leaders put tight restrictions on the number and subject matter of bills they would process.
It’s also affected the Chamber of Commerce’s annual job killer exercise. There are just 10 measures on its 2020 list, most of them related to the pandemic and/or benefits for workers whose employment is affected by the crisis.
Three of the bills would expand coverage for workers’ compensation benefits, which are financed by employers — roughly paralleling Gov. Gavin Newsom’s decree that ill workers deemed to be essential will be eligible for benefits without having to prove they were infected on the job.
With potential annual costs running into many billions of dollars, employers have opposed the blanket loosening of workers’compensation eligibility, saying it will make economic recovery more difficult.
The same argument is advanced against one of the 10 bills that would hike unemployment insurance benefits, which are also financed by employers through payroll taxes, and two others that extend employees’ rights to leaves of absence.
While the number and focus of bills on this year’s version of the job killer list has changed, one factor remains the same: the prominence of Assemblywoman Lorena Gonzalez, a San Diego Democrat.
Gonzalez, a former labor union official, has been one of the very few legislators to have a successful record of getting her bills enacted despite being given the job killer epithet and takes obvious pride in that fact. She has two bills on the 2020 list, one of the three expanding workers’ compensation benefits and another that would require corporate officials to file, under penalty of perjury, that they have not violated any state labor laws.
The chamber says the bill amounts to “public shaming of corporations and interference with corporate formation based on arbitrary, unclear and unfair standards.”
Thus, the annual battle begins.
Congressional Seat Flip Seen as Republican Turning Point
Associated Press
California Republicans have been waiting for a turning point and some think it’s finally arrived.
The party of Presidents Richard Nixon and Ronald Reagan has been fading in California for years: Democrats control every statewide office, dominate the Legislature and hold all but eight of the state’s 53 U.S. House seats. The GOP’s deficit in voter registrations: a staggering 4.4 million.
But the victory last week of a President Donald Trump-supporting former Navy pilot in a contested U.S. House race north of Los Angeles has emboldened Republicans.
“Do I think we’ve turned a corner? Absolutely,” said Jessica Millan Patterson, who heads the state party.
The GOP hit a humiliating low in 2018 when Democrats picked up seven Republican House seats in the state, even driving Republicans out of the one-time conservative fortress of Orange County. The rout helped Democrats retake the House.
The same year, the number of registered independent voters eclipsed Republicans in the state, reducing the GOP to third-place status.
After the losses, Republican National Committee member Shawn Steel said the state party had “reached the point of desperation” and was “completely outmatched” by state Democrats.
But the 10-point win by newcomer Mike Garcia over Democratic Assemblywoman Christy Smith in the 25th District — the kind of suburban swing district both parties covet — gave the GOP a rare moment of celebration, though it’s significance for November is open to debate.
It was the first time in over two decades that a Republican captured a Democratic-held congressional district in California.
Whether Garcia’s win was a sign of shifting politics or an aberration will be tested in Orange County, where Republicans hope to retake as many as four seats, all or partly in the county, lost in 2018.
Once a foundation block in the modern conservative movement and the rise of the Reagan revolution, the county has been a center for push-back against Democratic Gov. Gavin Newsom’s stay-at-home orders aimed at stemming the spread of the coronavirus.
Three weeks ago Newsom shut down the entire Orange County coastline after a heat wave drew large crowds to beaches in violation of state rules. A day later protesters filled the streets of the surfing mecca of Huntington Beach.
Garcia’s win “is a harbinger” for the November elections, Steel said.
Steel’s wife, Michelle Steel, chair of the Orange County Board of Supervisors, is on the ballot in the coastal 48th District, where she’s trying to oust freshman Democratic Rep. Harley Rouda. She seized on the beach shutdown to criticize Rouda, saying he postured rather than take on Newsom. The beaches were later reopened, albeit with restrictions including no sunbathing.
Both parties have quickly tried to generate donations on the outcome in the 25th.
U.S. Rep. Josh Harder, a freshman Democrat in California’s Central Valley, told supporters in an email that Garcia’s win “is not a great sign for California Democrats in the fall.”
“We will need every single person to step up,” he said in an appeal for donations as small as $10.
Republican Congressman Elton Gallegly, who served 13 terms before retiring in 2013, described Garcia’s victory as a “first domino” in a GOP turnaround. “We are going to see others fall,” he predicted on election night.
At a time when many ask if Republicans are relevant in California, Garcia “didn’t win, he overwhelmingly won,” Gallegly said in an interview. And turnout was surprisingly strong for an election in mid-May.
A welcoming sign for the GOP: Garcia appears to have performed well with independents, who make up about one in four voters in the state and typically lean Democratic. And running as an outsider against California’s Democratic leadership, Garcia likely benefited from restlessness among many voters after nearly two months under government stay-at-home orders.
Indeed, the Republicans running for House seats this fall are positioning themselves as challengers to the status quo. They’ve been attacking the Democratic incumbents as sellouts who ran two years ago as moderates, only to fall in line under House Speaker Nancy Pelosi’s leadership.
Politics swing in cycles, with change usually triggered by some type of crisis. Republicans are hoping the current environment in Democratic-controlled California plays to their favor, with many residents unhappy with stay-at-home and beach-closing orders during the coronavirus outbreak, the economy sinking, drastic budget cuts in Sacramento and a long list of persistent problems, from homelessness to a housing shortage.
But there are also factors that could make the party’s optimism misplaced.
Garcia’s win was under unusual circumstances: A special election, in the middle of May, with most residents under stay-at-home orders and traditional campaigning halted. Mail-in ballots were sent to every voter, and his win was powered by reliable, older GOP voters, while it appears younger, more fickle Democrats stayed away.
And in November, the electorate will be far different.
Presidential elections typically draw a large Democratic turnout in California, which could be bolstered this year by widespread opposition to the president in a state known as the home of the so-called Trump resistance.
California’s shift to Democratic dominance was driven by demographic change. California was once a reliably Republican state in presidential elections, but a surge in immigration transformed the state and its voting patterns, while many white, middle-class families moved out.
The number of Hispanics, blacks and Asians has outnumbered whites since 1998. And many of those new voters lean Democratic, while the number of registered Republicans has been in a freefall for years.
That will make it harder for the GOP — many of those new, younger voters grimace at the Republican brand. The voters who sent Nixon and Reagan to office decades ago are greatly diminished in number, replaced with younger voters with a liberal bent. You’d have to go back a generation to find a Republican who carried the state in a presidential election: George H.W. Bush, in 1988.
“Democrats have consistently picked up more seats across the country since Trump’s election, and one temporary setback isn’t going to change that,” said Los Angeles Democratic Party Chair Mark Gonzalez, noting Trump lost the 25th District in 2016.
But Sam Oh, who is running campaigns for Republican House contenders Steel and Young Kim in Southern California, sees Garcia’s win as confirmation that voters are looking for a new direction.
“November will come down to which side is going to be able to convince voters they are going to be able to change things,” Oh said. “People are fed up with the status quo.”
https://apnews.com/ea0e5f4b3af4a4fdb9190f0747a40724
Pandemic Pain Hits Silicon Valley Jobs
Wall Street Journal excerpt
Hours after Joe Taylor was laid off by Uber Technologies Inc., as part of the ride-sharing company’s far-reaching cost-cutting, the hardware engineer began looking for a new job. What he’s seeing is a Silicon Valley job market that has lost its spark.
The tech industry has been one of the most resilient sectors of the economy during the Covid-19-induced economic downturn. MicrosoftCorp. and Amazon.com Inc. reported strong sales growth for the first quarter even as quarantining measures came into effect. But major layoffs at big companies including Uber and Airbnb Inc., as well as a host of smaller startups, have shaken any sense that the tech industry is insulated from the broader employment destruction—and, for many, undermined hope that jobs lost would be easily replaced.
“Everyone’s just a little more wary,” said Mr. Taylor, 38 years old, who was let go earlier this month. Fewer recruiters have gotten in touch than in past job hunts, he said, as he’s scoured opportunities at large and small firms. The message from many recruiters, he said, has been: “I don’t have anything right now, but let’s stay in touch.’”
Mr. Taylor, during his 15-year career spanning big companies like Microsoft and San Bruno, Calif.-based Spansive, a startup making wireless chargers, has seen ups and downs before in Silicon Valley’s job market, including during the 2008 financial crisis. In its boom times, companies have offered bountiful pay and benefit packages in the race to secure talent. Now, however, Mr. Taylor and other tech workers point to signs that the race has cooled significantly.
Before, Mr. Taylor said, he would set his LinkedIn profile to show he was open to opportunities, and the recruiters would come flooding in. “You’d flip that switch and get 10 opportunities a week or something like that,” he said. “This time, you flip that switch and you get two or three hits.”
Uber on Monday announced it was laying off a further 3,000 people, two weeks after announcing around 3,700 job cuts, bringing the total to about a quarter of its workforce. In recent weeks, rival Lyft Inc. said it would slash 17% of its staff, and Airbnb said it is cutting about 25% of its jobs after bookings on its site plummeted with people largely unable to travel.
The three account for almost 10,000 positions lost just this month, with many more jobs gone across Silicon Valley, adding to the ranks of the nearly 36.4 million applications for unemployment benefits in the U.S. in the weeks since the Covid-19 outbreak hit. Tech startups have seen more than 56,000 layoffs since the coronavirus pandemic hit, according to Layoffs.fyi, a job-tracking site.
Several tech companies that have avoided job cuts have publicly or quietly instituted hiring slowdowns. Among those easing off is Microsoft, which has temporarily frozen recruitment for some roles while continuing to hire in strategically important areas, according to a spokesman. Google, the search giant owned by Alphabet Inc.,publicly announced last month a slowdown in hiring.
What’s now unfolding could reshape the long-term prospects for job seekers in Silicon Valley. Recruiters and some executives have said they don’t expect tech hiring to rebound quickly once an economic recovery sets in. “I don’t think you’ll see us adding back at that same level,” Uber Chief Financial Officer Nelson Chai said recently.
Two months of experience with the bulk of their employees working remotely also could change employment practices, potentially diminishing the focus on fabled Silicon Valley campuses that companies such as Apple and Facebook built and shifting some work overseas to cheaper workers.
Recruiters and tech employees say changes in the job market could mean people with sought-after experience likely will find new employment in the post-coronavirus tech economy. For those with thinner résumés, prospects may be darker, they say, in a market overflowing with talent at a time when companies are more conservative.
Asa Shoemaker, another Uber employee laid off recently, had worked on the company’s bike- and scooter-rental businesses assisting research and development engineers for about a year, before which she was a bike mechanic working on contract. Her Uber gig, she said “was a dream job.”
Ms. Shoemaker said she’s taking a pause before testing the job market, and is leaning on a group of other laid-off Uber employees who are banding together on a Slack channel to help each other find new work. But she isn’t confident about prospects when she returns. “There are many job listings, but no one on my team that I know of has gotten any serious offers.”
Tech’s job losses remain a small slice of the nearly 36.4 million applications for unemployment benefits in the U.S. in the weeks since the Covid-19 outbreak hit. U.S. information technology employment fell by a record 112,000 jobs in April, erasing a year’s worth of gains, trade group CompTIA said earlier this month, citing Labor Department statistics. Total jobs lost in the San Francisco Bay Area, the center of tech in the U.S., have reached at least 118,000, according to a tracker maintained by the San Francisco Chronicle.
Despite the downturn, though, some tech workers are finding jobs with companies that see the layoffs as a chance to secure talent they struggled to land only a couple of months ago because they couldn’t compete with some of the big tech companies then still gobbling up workers.
Harriet Ukaoma, who was among some 120 people laid off by recruiting startup Greenhouse Software in April, said after some intense legwork, she had 13 first-round interviews lined up a week after losing her job. She said she was recently hired at Clever Inc., an education startup in San Francisco.
Coalition Inc., a startup that offers insurance against cyberattacks, recently raised a $90 million funding round and has hired about 20 people since March. It has plans to add 80 more this year to address what it sees as a growing market for its products among risk-averse companies, Chief Executive Joshua Motta said.
“We’re really in a position to invest, even ahead of the growth,” Mr. Motta said. “I think a lot of businesses, ourselves included, who are in a favorable position have been asking how can we press our advantage and make those investments that maybe others can’t.”
Musk Rejects California; State Panel Rejects Musk
A California state panel rejected a request from Elon Musk’s SpaceX for $655,500 in state job and training funds, citing the chief executive’s recent threats to move Tesla, the electric carmaker that he also runs, out of the state.
The snub comes as Musk has sparred with officials in Alameda County over his plans to resume production at the Tesla plant there, which was stopped because of the coronavirus.
Five members of California’s Employment Training Panel voted to reject the proposal and two voted for it, with one member absent, after discussing Musk’s tweets on Tesla’s reopening and media reports of layoffs at SpaceX’s Hawthorne, California headquarters in recent years.
“In my opinion, given the recent threats of the CEO to leave the state of California, and everything else we’ve discussed today, this proposal does not rise to the level for me to feel secure in supporting it,” said Gretchen Newsom, a panel member and the political director of an IBEW electrical workers union local.
“SpaceX is a different company, but they have the same CEO,” said Newsom, who is not related to California Governor Gavin Newsom.
Though a small amount of money, the funding was opposed by organized labor groups. Tesla and SpaceX are both nonunion shops.
The funding from the state employment development fund was supposed to help SpaceX train 900 employees for its Starlink satellite project and hire 300 to work on its Starship program. It was unclear whether SpaceX intends to move forward with its hiring plan after Friday’s rejection.
SpaceX did not immediately respond to a request for comment.
Since the disagreement between Tesla and Alameda County gained national attention, officials from such states as Texas, Nevada, Georgia, Utah and Oklahoma have pitched Musk about considering their state for existing operations or for a new factory the company has promised.
Fewer Babies, Fewer Immigrants; Golden State Population Stable
When California, with 17 million residents, surpassed New York to become the nation’s most populous state in 1962, it was a cause for celebration.
The state had boomed during World War II and the postwar era, nearly tripling its population in just one generation. By the 1960s, it was well on its way to becoming a global economic powerhouse.
With the COVID-19 pandemic raging, a new state population report issued on May 1 didn’t get much media attention. But it underscored an important trend: California may be hitting its population peak and could start seeing a decline in the not-too-distant future.
The state Department of Finance calculated that California’s population growth — which had been as high as 600,000 a year in the 1980s — dropped to a net of 87,984 or 0.02% in 2019, leaving California just shy of 40 million people.
Why? Two reasons.
The first is that California’s production of babies has been declining while the number of people dying has been increasing.
The second is that the number of people leaving California for other states has been far higher than those who move here, while foreign immigration also has been waning.
Fewer babies, fewer young immigrants and the aging of the large post-World War II baby boom generation also mean that as California’s overall population growth slows to near-zero, its elderly population is still growing. And since the elderly population is mostly white, California’s black, Latino and Asian communities are destined to become ever-larger components of the state’s socioeconomic mix.
These demographic trends, if continued, would have enormous impacts even without the pandemic. If anything, the pandemic and the very sharp economic downturn it spawned will accelerate the trends, most likely retarding population growth even more.
While the birth rate had been drifting lower for years, it took a steep dive when the Great Recession struck in 2007, falling from 15.4 per 100,000 population in that year to 11.3 last year. If the pandemic recession persists, we can expect another drop in births, plus an even stronger outflow of people to other states and weaker migration from other countries.
Not only was the state population report issued during a pandemic, but also during a year when the federal government is conducting the decennial census, one that already had officials worried because many Californians — the poor, the nonwhite and the undocumented — are very difficult to count accurately.
A new study by UCLA researchers found that the poorest neighborhoods in Los Angeles County also tend to have the lowest census response rates and the highest rates of COVID-19 infection.
“As things stand now, the only way to prevent an extreme undercount in some areas of the county would be for a horde of in-person census takers to descend on parts of the city with the greatest chance of coronavirus transmission,” study leader Paul Ong said. “Given the ongoing health concerns, it remains to be seen whether in-person interviews will even be viable during the current census.”
Whatever the census decrees California’s population to be, it also will become the basis for calculating California’s share of the nation’s 435 congressional seats.
The state gained seven seats after the 1990 census, thanks to a growth of 6 million people in the 1980s, but it gained just one new seat after the 2000 census and none after the 2010 census. California is on the bubble for possibly losing a seat this time around, which would drive home the new reality that its 170 years of strong population expansion have come to an end.